Drowning In Debt?

These Groups Will Come To Your Aid If You're In Over Your Head

Four years ago, Wendy Williams had a problem. Well, 7,000 problems, to be exact. Years of careless spending and revolving credit had left the Schaumburg woman $7,000 in debt.

"I was having fun, buying clothes, treating people to lunch," says Wendy, now 26. "I was single and unfulfilled and spending made me feel better. When I maxed out my first credit card, I just got another one. I was juggling balances, and before I knew it, I was maxed out on eight cards."

And along came the creditors. "They were calling every day and I'd get into fights with them," she recalls ruefully. "I just stopped answering the phone. I would throw my mail without reading it, because inevitably there would be bills. I started to have anxiety attacks."

Desperate, Wendy turned to the Consumer Credit Counseling Service, a non-profit organization that helps people manage their money, devise and stick to budgets, and repay their debts.

At her first counseling session, Wendy watched tearfully as the counselor cut up all her credit cards. "It was very therapeutic," she says. "I realized they were going to help me get out of that vicious cycle."

CCCS has eight locations in the Chicago area; they each operate independently and set their own fees, says Catherine Williams, president of the CCCS of Greater Chicago.

There are two ways to work this program. You can have a few free (at some locations there is a fee) counseling sessions to help you plan a budget and maintain it.

Or, as Wendy did, you can join their Debt Management Program and let CCCS act as a liaison between you and your creditors. Every month you give CCCS a check, and it distributes the money to the people you owe. Williams' office charges $10 a month for this service, but others charge yup to $25.

In many cases, CCCS gets creditors to stop charging interest. That way debtors can start paying off the principal.

"It's also in the creditors' interest to work with us and to accept a reduced payment," Williams says, "because at least this way they're getting something." Some of the creditors give CCCS a percentage of the amount it collects for them.

Like Wendy, most clients stay in the Debt Management Program for three to four years. Counselor and client decide together what the monthly payment should be, depending on the client's financial situation. Wendy started by paying $75 per month, but now she pays $150. Her debt has dwindled to a manageable $1,200. The anxiety attacks have stopped.

But you don't have to wait until you're in the midst of a financial crisis to get help from CCCS. Williams happily reports that 25 percent of her clients are people who are not in trouble. "They just want to learn or relearn how to budget and set up their credit life. People are learning the importance of saving and investment," she says.

Williams notes several reasons why the other 75 percent of her clients are left with too much month at the end of their money. "People are in trouble because they have allowed credit to become a secondary source of income. Or because of downsizing, they're using credit until that perfect job comes along. Many couples don't discuss budgeting and money management. Finally, some people just have compulsive behaviors when it comes to money."

To reach the CCCS office closest to you, call 800-388-2227.

Metropolitan Family Services is another resource for debt counseling and debt management. Counseling services are offered on a sliding scale; if you can't pay, you won't be turned away. They also negotiate with creditors to reduce your payments and help you work out monthly payment plans. For information, call 312-986-4000.

But one organization, Debtors Anonymous, believes it's not enough to deal with your debt; you also have to deal with the emotional issues that surround your overspending. "Debting is a disease, just like alcoholism or overeating," says Nicole L., a spokeswoman for the 16-year-old national organization.

The people in Debtors Anonymous believe that credit counseling is just a quick fix. "All it does is take care of the current money problem, not the problems that got you there in the first place," she says. "At Debtors Anonymous, we work on the emotional and psychological issues, such as lack of self-esteem or substituting money for love."

The free program is set up just like Alcoholics Anonymous. There are 12 steps, sponsors and first names only. They hold several meetings a week in the Chicago area, where members discuss their problems and come up with their own debt payment plans.

Being in debt, like alcoholism, is a disease that can be brought under control, says Nicole, 30, who has been a member for 12 years. "But unlike alcohol, which you can avoid by not going to bars, you can't avoid money."

To get a schedule of local meetings or to find out more about Debtors Anonymous, write to them at P.O. Box 400, Grand Central Station, New York, N.Y. 10163-0400.

Some parting advice from the CCCS' Williams to help you secure your financial future:

- Take a financial snapshot. Honestly evaluate your finances and the ways you spend money.

- Bring your family into the process. It's easier if everyone is working toward the same goals.

- Decide how you will use your credit card. You might decide to use it just for emergencies.

"And remember," says Williams, "a shoe sale at the mall is not an emergency."

HELP IS IN THE MAIL

The Debt Relief Institute in Washington, D.C., offers a debt relief kit that contains all the forms necessary to help consumers combine their bills into one convenient monthly payment. It's as simple as filling out a credit listing account and mailing it back.

"Everyone's bills are different, so consumers will receive their own personal debt reduction proposal for their particular situation after completing and returning their listing sheets," says institute director Paul Richard.

The kit and the preparation of the personal debt reduction proposal are both free. Consumers can order a kit by calling 800-348-0598.